The agency world revolves around time. It's how you bill your clients, how you plan your resources, and how you evaluate the success of a project. So, when time tracking goes awry, chaos ensues.
Consequences of Inaccurate Time Tracking
Inaccurate time tracking can have serious consequences. While it may seem like a harmless oversight, the consequences of inaccurate time tracking can ripple through your agency and cause a whole host of headaches. Let's take a closer look at some of the repercussions agencies may face when time tracking goes awry:
Lost Revenue
Inaccurate time tracking means you're not capturing all the billable hours worked by your team. This can result in underbilling your clients and losing out revenue. Over time, this can add up and have a negative impact on your agency's financial health.
Overworked Team Members
If your team members are not accurately tracking their time, it becomes difficult to allocate resources effectively. This can lead to overloading certain team members with more work than they can handle, causing burnout and undue stress on your team.
Inaccurate client estimates
Accurate time tracking is crucial for providing clients with realistic estimates for future projects. When you don't have a clear understanding of how long similar projects have taken in the past, you run the risk of underestimating or overestimating the amount of time needed for future work.
Lack of project insights
Accurate time tracking allows you to gather valuable data and insights about your agency's projects. When time tracking is inaccurate, you miss out on opportunities to analyze project performance, and make data-driven decisions for improved project management and profitability.
Here's the deal: you've got to implement a rock-solid time tracking system that makes your team go, "Oh yeah, I got this!" Arm them with user-friendly tools that make time logging a piece of cake. Then, don't just let the data collect dust – analyze the insights! With accurate time tracking as your secret superpower, you'll avoid the pitfalls and maintain your agency's stellar reputation.
Challenges Agencies Face
Billing
Billing is fairly straight-forward when your clients are billed at a set-agreed project budget. This might be at the end of the project, or something like 40% upfront and the remainder invoiced at certain milestones or agreed time periods.
But not all projects have a fixed budget price. Some projects are billed per team member rate, some by the task rate, and some have a set-hourly project rate.
You've got your accurate time tracking software in place now, to tell you how many hours to bill for, but then comes the real head-scratcher - determining the correct rate those hours are to be billed at - if the client should be billed based on the team member rate, set-hourly project rate, or task rate?
And didn't one of the task rates increase? When was that?
And, being a global agency, nearly half of clients are billed in USD, a third in Euros and the remaining in GBP.
It's enough to make your head spin.
Forget the billing blues! Agencies can make life easier by picking the perfect timesheet software. Look for one that's got all the bells and whistles for task rates, set-hourly project rates, and team member rates. Choose timesheet software with currency superpowers, so you can bill clients in their preferred currency without breaking a sweat. Plus, it should be able to handle changes to rates, with billing updated from the effective date and should keep a history of those rates, just in case you need to go back in time and settle any "What was the rate back then?" debates. With the right timesheet software, agencies can whip up accurate billing reports for clients faster than you can say "bill me."
No one wants to pay extra, so make sure it doesn't charge a premium for essential billing features.
So, make billing a breeze. Choose wisely, and wave goodbye to those billing headaches.
Tracking Productivity and Utilization
Tracking your team’s utilization rates is essential for getting an accurate picture of your agency’s chargeability and productivity.
Knowing how your team is spending their time lets you identify underutilization and overload and ineffective task allocation, enabling you to manage resources better and ensure that projects are delivered on time and completed within budget.
Capacity Planning and Availability
Another challenge agencies face is accurately gauging team member's capacity and availability. Sure, most timesheet apps show you how many hours they logged last week, but that doesn't help you figure out if they can handle any new tasks. It won’t tell you what their current workload is, which active projects they're working on, or how many hours they have allocated to these projects, so you can confidently allocate or assign them to another project.
Most also don’t tell you the project or team member timeline - the dates the project is due to end or the dates the team member assignment is coming to an end.
Critical Team Member and Project Insights
Having a good understanding of the financials is crucial for monitoring the performance of projects and team members.
Many timesheet apps provide basic insights such as time reports and billable hours, but they lack comprehensive reports that you would expect from such software.
KPI’s such as utilization, productivity, profitability are the measures you need to be monitoring regularly in order to stay on track and hit your targets.
Most agencies have to revert to multiple spreadsheets to get all of this insightful data. Bring on the data entry and formula errors and wasted admin time......
Most timesheet apps also lack a full multiple currency capability - some do allow you to bill in different currencies (which you often pay a premium for), but very few can cope with multi-currency team member costs (and therefore can’t give you any useful billable vs cost insights).
If you're a worldwide agency with different currencies floating around, choose a software that can do the maths for you. Get those currency converted reports, so you can stay on top of your game and crush those targets.
Conclusion
In conclusion, accurate time tracking is essential for agencies to maintain their financial health, allocate resources effectively, provide realistic estimates to clients, and gather valuable insights about project performance. Inaccurate time tracking can lead to lost revenue, overworked team members, inaccurate client estimates, and a lack of project insights.
To overcome these challenges, agencies should implement a rock-solid time tracking system with user-friendly tools that make time logging easy. Additionally, agencies should choose timesheet software that can handle various billing methods and currencies, track utilization, capacity and availability, and provide comprehensive reports for better project and team member management.
By making accurate time tracking a priority, agencies can prevent the negative repercussions of inaccurate time tracking and overcome the difficulties that agencies often encounter.
